Dow Jones Futures fall: Nasdaq rally on Nvidia, but PCE inflation report looms

Dow Jones futures fell Friday morning, along with S&P 500 futures and Nasdaq futures. Booking Holdings, MercadoLibre and Square were notable earnings reports late Thursday, while Boeing (BA) stopped 787 Dreamliner deliveries again. Before the opening, all eyes will be on the Fed’s favorite inflation gauge, the PCE price index.


The stock market rally was up and down Thursday, but closed near session highs. Nvidia (NVDA) surged in revenue and many other chipplays were up as well.

The S&P 500 held significant support while the Nasdaq and Russell 2000 moved close to resistance.

The stock market rally remains under pressure and investors should act accordingly.

Free market (MELI), Book holdings (BKNG), Autodesk (ADSK), intuitive (INTU), Floor & Decor (FND) and Square parent Block (SQ) reported late on Thursday.

Boeing is halting deliveries of 787 Dreamliner jets for “additional analysis of a fuselage component,” the FAA said. Deliveries will not resume until Boeing shows regulators that the problem has been resolved. The Dow Jones aerospace giant resumed 787 deliveries at the end of 2022 after a hiatus of more than a year. BA shares fell 3% early Friday, signaling a 50-day line test.

MELI stock and Floor & Decor are on the IBD 50 list. The BKNG share is on the IBD Big Cap 20.

PCE inflation rate

The Department of Commerce will release its January Personal Consumption Expenditure Index at 8:30 a.m. ET, as part of its Income and Expenditure report.

The PCE price index should show a gain of 0.4% compared to December. The core PCE index, excluding food and energy, is also up 0.4%. PCE inflation should fall from 5% in December to 4.9%, while core PCE inflation should fall from 4.4% to 4.3%.

Keep a close eye on prices for non-energy services excluding homes. Fed chief Jerome Powell has said he is keeping a close eye on this super-core inflation measure.

Meanwhile, economists expect a 1% gain for personal income, while consumer spending is up 1.2%.

Dow Jones Futures Today

Dow Jones futures fell 0.5% from fair value, while Boeing shares weighed on blue chips. S&P 500 futures lost 0.65% and Nasdaq 100 futures fell 0.9%.

Crude oil futures rose slightly. The copper price fell by 1%.

The 10-year Treasury yield increased 3 basis points to 3.91%.

PCE inflation is sure to rock Dow Jones futures, government bond yields and more.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

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Main income

MELI shares rose 6% in late trading as MercadoLibre’s earnings crushed views and also topped earnings for the Latin American e-commerce and payments giant. Shares rose 1.6% on Thursday to 1,136.26, above the 21-day line. MELI stock was technically within the buy point range of 1,095.44. But MercadoLibre stock will break a short trendline at Thursday’s open.

BKNG shares were close to closing, even as booking revenue surpassed views. Shares undercut the 21-day line intraday Thursday, but closed just 22 cents at 2,426.49. Booking stock, which has had a strong 2023, is now gripping a long consolidation with a buy point of 2537.10.

Shares of ADSK fell 4% in long-term action as Autodesk’s earnings slightly outperformed views, but the design software maker moved lower overall. Autodesk shares rose 2.1% to 221.16 on Thursday. Stocks have a buy point of 232.25 on a double bottom.

INTU shares tipped higher overnight. Intuit earnings far surpassed second-quarter returns, but the TurboTax software maker only reiterated its in-line fiscal guidance for 2023. Shares rose 1.35% on Thursday to 411.88, back above the 200-day line after retaking the 50 days on Wednesday. Intuit shares have a consolidation buy point of 490.93 but may have some early entries.

FND shares rose 5% after Floor & Decor’s earnings topped views, while earnings just lagged. Floor & Decor’s stock rose 1.9% to 90.83, above a buy point of 88.82 cups with handle. Shares of FND wiped out double-digit gains on Tuesday, according to MarketSmith’s analysis.

SQ shares rose 6% in extended trading after Block earnings missed but topped revenue. Block shares rose 1.6% on Thursday to 76.11, slightly above the 50-day mark. A decisive move by SQ stock from the 50-day line could provide early access to a low.

Stock market rally Thursday

The stock market rally started solidly higher based on Nvidia revenue, which turned into modest losses by midday before rebounding.

The Dow Jones Industrial Average closed 0.3% higher in trading on Thursday. The S&P 500 index climbed 0.5%, with Nvidia stock the best performer. The Nasdaq index rose 0.7%. The small-cap Russell 2000 gained 0.7%.

US crude oil prices rose nearly 2% to $75.39 a barrel, ending a six-day losing streak. Natural gas rose 6.4%, a second solid gain in a row.

Copper futures fell 3.1%.

The 10-year Treasury yield fell 4 basis points to 3.88%.


Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.9%. The VanEck Vectors Semiconductor ETF (SMH) rose 3.5%. The NVDA share is an important holding.

SPDR S&P Metals & Mining ETF (XME) lost 1%. The Global X US Infrastructure Development ETF (PAVE) climbed 0.9%. US Global Jets ETF (JETS) rose 1.3%. SPDR S&P Homebuilders ETF (XHB) rose 1%. The Energy Select SPDR ETF (XLE) bounced 1.5% and the Financial Select SPDR ETF (XLF) rose 0.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.3%.

Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 1.5% and ARK Genomics ETF (ARKG) fell 1.35%.

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Analysis of the market rally

The stock market rally came to a close after a ping pong session. Falling government bond yields likely contributed to the afternoon’s rally. Ultimately, the indices are still in tight trading territory.

The Nasdaq composite reached its 21-day moving average near the open, falling back to just above its 200-day line before reversing and approaching its intraday highs in the morning. Nvidia was a major driver. NVDA stock rose 14% while also spurring a broad chip.

The S&P 500 fell below the 50-day move line for much of the day before moving higher again.

The Russell 2000, like the Nasdaq, also encountered resistance at the 21-day moving average.

A number of stocks scored higher on earnings, such as Nvidia. Overall, the leading stocks closed well, but clearly tracked intraday shifts in the broad market.

The stock market rally is under pressure and behaving accordingly. The major indices try to maintain support, but soon encounter upside resistance.

Just because the S&P 500 has held the 50-day line for the past two sessions doesn’t mean it will continue to do so. The Dow Jones tested its 50-day line for four weeks before breaking lower on Tuesday. The Dow reached a two-month intraday low on Thursday before bouncing.

Friday’s PCE inflation report looms. A tame reading can be a positive catalyst. But hot inflation pushing 10-year Treasury yields to 4% could dampen the fragile market rally.

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What to do now

Thursday’s market action is why investors shouldn’t get too excited about a strong open. Stocks that looked useful or promising in the first few minutes of trading quickly fell back, with few exceptions.

Wait for the major indices and leading stocks to show some real strength, with the Nasdaq decisively reclaiming its 21-day moving average along with the big-cap S&P 500 and small-cap Russell 2000. Even then, investors should gradually ramp up exposure again. do not rush.

In the meantime, update your watchlists for possible purchases and check your portfolio for possible changes.

If the market continues to deteriorate, be prepared to take a more defensive stance.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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